Deutsche Bank still lagging in capital race 31 Jul 2012 The German lender is responding to the investment banking slowdown by slashing 3 bln euros off costs. But investors have to wait until September for the vital details. And Deutsche’s new co-CEOs have missed a chance to lift the bank’s capital buffers closer to those of its peers.
Deutsche Bank’s profit miss isn’t temporary hiccup 25 Jul 2012 Weak client activity and the falling euro’s impact on costs have driven the German bank to warn that Q2 net income will be only 700 mln euros, 30 pct below forecasts. These aren’t short-term headaches. And Deutsche’s capital and job-cut plans still look less punchy than peers’.
Investment banking job cull is long overdue 23 Jul 2012 Faced with slumping income and tough regulation, the industry is bracing for another round of cuts. That won’t be easy: to make savings, banks will have to ditch business lines or redesign structures. But with shareholders antsy and no rebound in sight, they have little choice.
Gas giant Linde expands to fill healthy space 2 Jul 2012 The German company will pay $4.6 billion including debt for Lincare, a specialist in respiratory gases. That is a full-looking 9.3 times EBITDA and synergies will be limited. But Linde boosts its U.S. footprint - and secures a route to growth outside its consolidated core market.
Reform denial puts Hollande in minority of one 22 Jun 2012 France, Italy and Spain will try to convince Germany to accept some form of debt mutualisation at a four-way summit today. But the most serious divide is between France, which doesn’t see the need for economic reform, and its three partners, who have embraced it.
Hugo Dixon: ECB and euro governments play chicken 4 Jun 2012 There isn’t just brinkmanship between the zone’s core and its periphery; there’s also a standoff between the central bank and the governments over who should rescue the single currency. In such games somebody usually blinks. But if nobody does, the consequences will be terrible.
Carlos Slim may drive KPN to poison 1 Jun 2012 The Dutch telecoms group is scrambling to dodge what it sees as a takeover-on-the-cheap from the world’s richest man. It seems to want to do a deal in Germany that’s been talked about for years. But counterpart Telefonica isn’t ready to trade. KPN might resort to poisoned pills.
Euro slide helps Germany a lot, periphery little 30 May 2012 The biggest beneficiary of a weakening euro is Germany, not the problem periphery. German exports are a big share of GDP. Greece and Spain export little - and don’t have Germany’s global reach. Even when it falls, the euro works better for Germany than for Europe.
French-German euro bond clash isn’t serious yet 23 May 2012 François Hollande likes them and Angela Merkel doesn’t. But the leaders are unlikely to clash on the need for euro bonds - at least for now. Both know the bonds won’t solve the immediate crisis. And before they can disagree, they must clarify what they’re arguing about.
SAP showers more cash on the "cloud" 23 May 2012 The German software giant is buying e-commerce outfit Ariba at a $4.3 bln enterprise value. A price of nearly 10 times last year’s sales looks rich - as did December’s $3.4 bln purchase of Successfactors. But SAP is desperate to keep up as clients shift to online applications.
Germany’s zero-coupon bond redefines ROC 22 May 2012 Forget return on capital. Germany is promising no more than return of capital with a new zero-interest bond. Investors get their money back in two years, with almost nothing more than a warm feeling of security in the meantime. Still, a lot can happen in two years.
Hot infrastructure auctions drive down returns 22 May 2012 Investors want big, predictable assets in the less rickety bits of Europe. While debt is cheap, there isn’t much for sale. So auctions like E.ON’s 3.2 bln euro sale of gas grids run pretty hot. Even if the bets are less extravagant than in the credit boom, returns will suffer.
UK workers overtake Germans – in cheap cars 17 May 2012 More manufacturing is what the UK government wants. And General Motors’ decision to add car-making capacity near Liverpool is a victory, beating Germany at its own game. British workers have had to become cheaper, just like the pound. That has its downside. But it’s a way from A to B.
Hollande-Merkel agenda is more Greece than growth 15 May 2012 The French president is flying to Berlin on his inauguration day to meet Angela Merkel. Hollande won’t just try to smooth things over with the German chancellor on fiscal discipline. The Greek crisis has forced the leaders of Europe’s two largest countries to brace for the worst.
Germany gives lesson in "free lunch" economics 15 May 2012 Strong technology and labour reforms keep making Germany richer - a quarterly 0.5 percent GDP increase is the latest sign. The rest of the world also gains from strong German exports. But trade surpluses bring credit losses and political spats, especially in the euro zone.
German yields could get crazier still 11 May 2012 Ten-year Bund yields have fallen to 1.5 pct for the first time in over 25 years. Fears of a Greek exit are leading investors to pay up for safety. The trend can continue as long as no one thinks about the likely end of the story: Germany picks up most of the bill for the crisis.
Dresdner bonus ruling thankfully won’t spark trend 9 May 2012 Investment bankers at the defunct German bank have won their legal battle against Commerzbank, their rescuer in 2008, for non-payment of 50 million pounds of bonuses. It’s a depressing relic of a bygone age. Fortunately, bonus reforms since the crunch make copycat cases unlikely.
Commerzbank success is Pyrrhic victory for EBA 9 May 2012 The German lender has filled a 5.3 bln euro capital hole seen by Europe’s banking regulator in December. But Commerzbank’s solution has largely come via balance sheet tweaks rather than by raising new equity. It will do little to improve investors’ shaky confidence in the sector.
Let Germany inflate while others deflate 8 May 2012 The Bundesbank is worried about a possible loosening of the ECB’s monetary policy. That’s not on the cards, but should be. Additional central bank support might push German inflation above the euro zone average - but the differential would help rebalance the European economy.
Europe would welcome higher German wages 30 Apr 2012 Higher German consumption and more expensive exports would help balance the euro zone. Industrial action in favour of a 6.5 percent pay rise, and talks about a nationwide minimum wage, should please Berlin’s partners. But they shouldn’t hope too much, for now.